Hedgehog signaling plays a key role in normal epidermal and hair follicle development as well as in cutaneous cancer development. This is well illustrated by the fact that patients with a germ line mutation in the hedgehog receptor PTCH1 are strongly predisposed to develop skin basal cell carcinomas and several internal cancers. In addition, mice lacking Sonic hedgehog (Shh) fail to develop hair follicles past the early placode stage. However, the molecular details of hedgehog signaling in skin and how the functional consequences of hedgehog signaling in skin and how the functional consequences of hedgehog signaling are brought about are to a large extent unknown. In this proposal we will address these hedgehog pathway. To analyze the role of autocrine Shh signaling in keratinocytes for hair follicle development during embryogenesis as well as for hair follicle cycling in adult mice we will generate conditional knockouts of Ptch1. A second Patched-like gene is Ptch2, which is approximately 50-60% similar to Ptch1 and mainly expressed in Shh producing cells, but with a so far unknown role in the signaling pathway. To understand the role of this gene we will in a similar manner generate mice allowing tissue specific ablation of Ptch2. Suppressor of fused, Su(fu), is an intracellular negative regulator of Shh signaling presumably affecting the nuclear shuttling of down-stream effectors. The role of Su(fu) in normal epidermal morphogenesis will be determined by the study of mice either lacking Su(fu) in normal epidermal morphogenesis will be determined by the study of mice either lacking Su(fu) expression (enhanced Shh signaling) or over-expressing Su(fu) blocking Shh signaling). Furthermore, to investigate the role of Gli genes as transcriptional effectors in the hedgehog pathway, mice inducibly over- expressing Gli1 or a dominant negative Gli3 will be used. The upstream activator of Shh signaling in skin is presently unknown. Together with other members in the program we will test the hypothesis that signaling through Edar activates Shh expression and that activation of NF-kappa is of importance for such an effect.